21 November 2018 11am - McPherson's Consumer …...2018/11/21 · 2016 CAGR To 2021 Global Face...

M C P H E R S O N ’ S L I M I T E D

2018 ANNUAL GENERAL MEETING2 1 N o v e m b e r 2 0 1 8

1 1 a m

1

A G E N D A F O R T O D A Y

2018 Annual General Meeting 2

Welcome from Graham Cubbin and Chairman’s Address

Laurence McAllister, Chief Executive Officer’s Address

Presentation from Marketing Director - Donna Chan

Presentation from Strategy, Planning & Innovation Director - David Fielding

Formal business of the meeting including shareholder questions, (all resolutions to be by poll)

Meeting closes. Tea and coffee

Poll results announced to ASX.


G R A H A M C U B B I N , C H A I R M A N

32018 Annual General Meeting


A leading supplier

of health, wellness,

beauty brands in

Australasia

H E ALTH , WE LLNE SS AND BE AUT Y MAR K E T DR IVE R S


CHINA WELLNESSAGING

POPULATION

NATURAL BEAUTY

MATTERS

HEALTHY AND

ORGANIC LIVING

+ + +

A WINNING TE AM - D IR E CTOR S

Laurence McAllister

Managing Director

Graham Cubbin

Chairman

Geoffrey Pearce

Non-Executive Director

Grant Peck


Jane McKellar


Alison Mew



A WINNING TE AM – SE NIOR LE ADE R SH IP TE AM


Brett Owers

Commercial Finance Business Director

Lori Pirozzi

International Sales Director

Sarah Tully

HR Director

Laurence McAllister

Managing Director

Paul Witheridge

Chief Financial

Officer

David Fielding

Strategy, Planning & Innovation Director

Donna Chan

Marketing Director

Mark Brady

Supply chain DirectorMary Pearce

R&D Director

LAUR IE MCALL ISTE R , MANAGING D IR E CTOR


At the FY18 Results we reported:

• +6% increase in sales from core six brands, with Multix now

back to growth of +11% in the 2nd Half vs. FY17

• +41% increase in sales from skincare brands, driven by &

Export channel and domestic Pharmacy

• +17% increase in underlying PBT from continuing

operations

• Divestment of Home Appliances for 7 x EBITDA

• New & revamped functions driving further growth agendas

– R&D, New Business Ventures & International

• 73% reduction in net debt $9.8 million

PRIORIT IES & RESULTS IN FY18 BUSINESS HIGHLIGHTS


At the beginning of the year we set out the following

business priorities:

• Accelerate core 6 brand performance

• Live the virtuous cycle of the export business model

• Execute supply chain EBIT optimisation initiatives to

re-invest in core six owned brands

• Divest Home Appliances and reset our focus on a

Health, Wellness and Beauty

• Redesign the top six customer trading terms via

joint customer business plans

• Return our New Zealand operation to EBIT growth

TR ADING E NV IRONME NT

20/11/2018 2018 ANNUAL GENERAL MEETING1010

104.7Not Particularly Strong

Source: Westpac MI Consumer Sentiment Index Nov ‘18

+1.9%Year Through to Sep ’18

Source: ABS, 31st Oct ‘18

TRADING INDICES

MACRO INDICES

CONSUMER SENTIMENT CPI HOUSEHOLD DEBT

200%HH Debt To Income

2X …last 20 Years

Source: ABS, Jan, ‘18

Pharmacy GROCERY COMMODITY PRESSURE

Ex. Tobacco & Formula

+2.1%

Source: IRI / Aztec , MAT Oct ‘18

Front of Store

+3.9%

Source: IRI / Aztec , MAT Oct ‘18

AUD/USD Weakness

MACRO TR E NDS TO LE VE R AGE

China middle-class

population projected to

exceed 600M by 2022

CHINA

EXPORT

SUSTAINABLE

SOLUTIONS

DEMAND FOR

NATURAL

PROACTIVE

CARE

Global Face Mask Market expected to

reach $8.8B in 2021

China represents 48% of market

Australia Face Mask Market +50%

CAGR (2016-2018)

Global Organic Personal Care

Market projected to reach

$25B by 2025

Renew | Reuse | Recycle

Remove

Source: IRI Market Edge; Euromonitor International; Grand View Research, Inc., 112018 Annual General Meeting

3 YEAR STRATEGY


DRIVE VALUE FROM GEOGRAPHIC

FOOTPRINT

GROW CORE 6 OWNED BRANDS

Explore new product growth

platformsMove to strategic

customer and supplier partnerships

S T R AT E G I C E N A B L E R S

End to end capability and capacity -

supply chain, route to market and IT

Strong agency partners compliment portfolio,

scale and capability

C O R E O W N E D B R A N D S


#1 position in

beauty tools

#1 position in

Bags, Wraps and Foil

Aspire to grow to top 5

in natural skincare

#1 position in

hair accessories

#1 position in

cosmeceutical skincare

#1 in cotton products

NO. 1 AUSTRALIAN COSMECEUTICAL BRAND

Source: IRI Market Measurement –Pharmacy Scan, Data to: MAT Value to 14/10/18

ACCELERATING BRAND

GROWTH

2X Brand Investment

INNOVATIONBUILDING

BRAND EQUITY

LINE SMOOTHING COMPLEX

12,000

Triple Action Day Defence

sold in 3.5 minutes

CHINA EXPORT

DEMAND

CORE

REJUVENATION

REVERSADERM

Sales 8X vs prior relaunch

Award Winning

COLLAGEN MASKS

1 x Mask sold every 60

seconds


INNOVATING IN LARGE GROWTH SEGMENTS

2016 CAGR To 2021

Global Face Mask Market $5.7B +9.1%

China Face Mask Market $2.7B +11.7%

Source: Coresight Research; Euromonitor International 152018 Annual General Meeting

FAST GROWING NATURAL SKINCARE AND HAIRCARE

DOMESTIC GROWTH

Skincare: +40% MAT growth

Haircare: +15% MAT growth

Source: IRI Market Measurement – Pharmacy Scan, Data to: MAT Value To 14/10/18

MAT= Moving Annual Total; Qtr= Quarter; YA= Year Ago

INNOVATION & DISTRIBUTION EXPANSION INTERNATIONAL EXPANSION INTO NEW MARKETS

INTERNATIONAL GROWTH

Export: +117% CAGR ex. factory growth (2016 – 2018)

9 International Markets


LEADERS IN HAIR & BEAUT Y ACCESSORIES

LADY JAYNE

CORE INNOVATION

Extending Market Leadership to 29.4%

Detangling Innovation & ATL support

15 incremental products

Brand Ambassador Star Power with 2M followers

Source: IRI Market Measurement – Scan, Data to: QTR Value To 30/09/18

GLAM BY MANICARE

INNOVATION GLAMOUR


SMART

TECHNOLOGY

LEADING INNOVATION IN PHARMACY

MANICARE SONIC MINI

#1 Contributor to Category

Value growth

#13 Top Seller

(out of 1130 products)

#1 Product within the

Cleansing Segment

Source: IRI Market Measurement – Scan, Data to week ending 30/09/18, Priceline (8 weeks in market) 182018 Annual General Meeting

LEADING SUSTAINABLE INNOVATIONS


RETURN TO GROWTH & DRIVING CATEGORY GROWTH

Source: IRI Market Measurement – Scan, Data to: QTR Value To 16/09/18

FIRST TO MARKET

NEW PRODUCTS

INCREMENTAL

RANGING

BRAND

INVESTMENT

• 15 incremental products ranged

• Share gains Feb – Sep 2018

30.8% to 33.6%

• Multix growing:

+166% for Greener

+47% in Kitchen Tidy

+9% in Baking Paper

+8% in Foil


INVESTING IN BRAND EQUIT Y & GROWTH


Multix_Choose Wisely_MCP0009T30RALT_REV_Agency.mp4

DIGITAL CONTENT AMPLIFICATION

Digital Tracking 1/7/18 to 31/10/18

• 2M digital advertising

impressions for Glam

• Over 750k consumers

reached each month on

social platforms

• A MCP video is viewed

6500 times every day

• Influencer campaigns

reaching over 500,000

consumers

• 850 SKU product library


STRATEGIC CUSTOMER/SUPPLIER PARTNERSHIPS

• Top to top meetings

• Joint Business

Planning

• New Trading Terms

to increase

customer

participation

• Strategic investment

plans

STRATEGIC CUSTOMER PARTNERSHIPS INNOVATION

PARTNERS


WINNING WITH OUR CUSTOMERS

24

#1 AUSTRALIAN BEAUTY SUPPLIER IN PHARMACY

+118% Brand Growth+74% Sales Uplift

+25% Sub-range Growth>600 consumer entries

Source: IRI Market Measurement – Scan, Data to: MAT Value To 14/10/18 Pharmacy 2018 Annual General Meeting

DRIVING CUSTOMERS IN-STORE & ONLINE


WINNING IN-STORE

• Incremental ranging and channel expansion in over 1,000 doors across both Grocery and Pharmacy

• 45,000 incremental distribution points

• Chemist Warehouse: 55 new SKU’s, 22.6k incremental distribution points Vs YA

• 11 Extra Displays in 282 Stores

• What’s On In The Warehouse, approximately 12, 3X Vs YA


MASK DESTINATION

+45% INVESTMENT IN REAL ESTATE, ROI IN 12 MONTHS

CATEGORY LEADERSHIP MERCHANDISING

• Implemented in 120 high performance Chemist

Warehouse stores in 2018

• High impact within front of store high traffic areas

• Ease of shopper shelf navigation

• Fuelling the path to purchase with interactive

screens

• In store from October 2018

CWH Hillsdale, NSW – after new merchandising stands 2018 Annual General Meeting 27

CH E MIST WAR E H OUSE UPDATE


3 YE AR STR ATE GY



FOOTPRINT










Source : IRI The Big Picture MAT 1/10/17 Grocery AU & Pharmacy

($4.6 Billion, 0.2% vs YA)

The intent of enhancing and restoring

health via symptomatic treatment

Wellness

($5.7 Billion, +3.8% vs YA)

Maintain the state of good health by pro-

actively seeking to prevent the onset or

worsening of conditions

Beauty

($3.0 Billion +1.3% vs YA)

The subjective enhancement of

physical perception for ones own

satisfaction

Total

Health

Grocery

877

Total

Health

Pharmacy

3,720

19%81%

Retail Sales (Millions)

Total

Wellness

Grocery

4,104

Total

Wellness

Pharmacy

1,596

72%

28%

Retail Sales (Millions)Total

Beauty

Grocery

1,599

Total

Beauty

Pharmacy

1,365

54%

46%

Retail Sales (Millions)

H E ALTH , WE LNE SS & BE AUT Y: A $13 B ILL ION MAR K E T


5 WE LLNE SS TR E NDS R E LE VANT TO MCP

31Source: Mind, Body Green – Online Publication Dec 2017

• Boutique to Mass

• Ingredient transparency =

“new normal”

• Holy Grail - Exceptional

results from Natural

ingredients

• Focus = Gut microbiome

• Exciting discoveries.

Bacteria & fungi play a

critical role

.

• Targets: skin care, anti-

aging, repairing the gut,

wound healing, & boosting

immune system

• Marine Collagen: Natural

source of collagen

• Seeking brands to achieve

wellness goals

• Estimated $1 trillion of

buying power

• Mitochondria are “power

plants” in the cells

• Poor functioning = expect

less from the body and

brain


HEALTH & BEAUT Y CATEGORIES ARE WINNING


Health & Beauty

+$105M

45

24

15

9

4

Dietary Supps

Skincare

Cough & Cold

Analgesics

Frangrances

16

4

3

2

2

Infant Formula

Skincare

Analgesics

Digestive

Soaps & Wash

$M Growth Actual vs YA $M Growth Actual vs YA

Skincare 2nd largest

growth category in both

Grocery and Pharmacy

Source: IRI Future of Pharmacy Presentation August 2018 Qtr Growth (MAT= Moving Annual Total; Qtr= Quarter; YA= Year

Ago)

Infant Formula

Skincare

Analgesics

Digestion

Soaps & Wash

Vitamins

Cough & Cold

Analgesics

Fragrances

Skincare

PHARMACY GROCERY

SK INCAR E E XPORT TO CH INA….ACCE LE R AT ING

Source: IRI Future of Pharmacy Presentation August 2018 Qtr Growth (MAT= Moving Annual Total; Qtr= Quarter; YA= Year Ago)2018 Annual General Meeting 33

MCP: SOL ID ASSE SSME NT PROCE SS & E VALUAT ION CR ITE R IA

34

Agreement prepared

Contributions defined

Finalisation of valuation

Submission of final offer

Settlement

Consumer Research

Patents and Trademarks reviewed

Sales Validation

Expenses Validation

Full Due Diligence

Document review

Initial Proposal of draft principles prepared

Submit proposal to venture partner

Proposal reviewed

Proposal amended

Revised Proposal submitted

Method Determination

Revenue Modelling analysis

Valuation Preparation

Internal Valuation review

High Level Principles

Document

Sales Projections

Cost analysis

Detailed Benefits

analysis

Voice of Customer

Revised Project Score

Opportunity

Assessment Profile

Assess Key Elements

- Positioning

- Unique Selling Proposition (USP)

Potential Benefits

- Synergies

- Incremental growth

Risk

Brand Landscape

- Market size

- Category profile

- Competitor analysis

- Product analysis

Initial Criteria Assessment

FORMAL OFFER

DETAILED RESEARCH

GUIDING PRINCIPLES DRAFT VALUATIONPROJECT MODELLINGINITIAL EVALUATION


ENTER ING FAST GROWING H ,W & B … V IA DE -R ISKED OPPORTUNIT IES

Day 1:

Majority Owned

Win Domestically

Trusted Partner

New Venture Co. Pre-Agreed Buyout

Unique

Export (China) Facing



WH Y WE FOUND IT AN ATTR AC T IVE VE NTUR E

1. A World First delivering first mover advantage

2. Unique proposition, hard to replicate & strong barriers to entry

3. China attraction

4. Discovery & Provenance story – authentic

5. Trusted partners


Video … Who is Kotia ?


WH AT MAK E S KOT IA SO UNIQUE ?

Pioneering a new frontier between natural actives and scientifically proven cosmetics the Kotia range

is the world’s first cosmetic range formulated with NZ deer milk to:

• Improve skin health

• Provide nourishing hydration

• Protect against environmental pollutants

• Deliver unique formulations for anti-ageing, skin rejuvenation & brightening


KOT IA DE E R MILK … A NATUR AL WINNE R


DE R MATOLOGICALLY TE STE D & E NDOR SE D

Stability tested SP15 Certified

Patch tested/

Dermatologically

tested

Fragrance allergy

tested

Claim: “The creams provide rapid and intensive hydration to the

skin” Dr Sonya Scott


THE WORLD’S F IRST DEER MILK SK INCARE RANGE

Premium products

Premium performance

Rejuvenating

Serum

Hydrating Day

Cream SPF 15Gentle cleansing

milk

Brightening

Hydration Mask

Brightening Eye

Cream

Regenerating

Night CreamGentle Tonic Lotion

Nourishing

Hydration Mask


KOT IA … IN SUMMARY

• The World’s first to market Deer Milk Skincare range

• Premium quality, targeting prestige segment

• Harnessing the power of natural deer milk with high efficacy science

• Dermatologically tested and certified range

• Clinically proven performance


NE W BUS INE SS / M&A

• Capability to enter new fast growing categories – Internally led

Organically Build New Brand(s)

• Unique IP, smaller uncomplicated deals

• Add value through our relationships, infrastructure, sales, marketing and execution capability

Small Bolt - On Acquisitions

• Venture with new partners: Leverage unique IP & MCP unrivalled reach & execution capability

• Recognising the value that MCP brings to partners

Joint Ventures

• Well positioned to pursue a Game Changing Acquisition

• Health, Wellness & Beauty Focused

• Looking for strong synergies with existing business and opportunity to expand geographic distribution (e.g. China)

Game Changing M&A Deal

4444


platforms

AGENCY

GREENFIELD

DEVELOPMENT

EXTEND

EXISTING ACQUIRE


3 YE AR STR ATE GY



FOOTPRINT










China Nth Asia Sth Asia UK Middle East

% Chg vs

YA FY183X 100% Incremental 100% Incremental 25% Flat

Strategy

Establish cross border e-comm.

trading model & build strong

partnerships with leading

distributors in Australia & China

Capture new Export Mkts Utilise Singapore hub to capture new

Export Mkts

High Penetration

established Mkt

Awareness & trial via QVC

channel; 15.4mm homes

High Penetration

established Market

Brand

Focus

• Dr LeWinn's 135k agents

• A’kin trading on 6 platforms ,

endorsement via 120 KOLs

• Karen Murrell Daigous & key

strategic platforms

• Dr LeWinn’s (KR) (JP/

HK)

• A’kin (JP/KR/ TW)

• Swisspers (TW)

• Multix (CH, HK)

• A’kin (MY) (ID/PH/TH/VT/IND)

• Multix (MY/ID) (PH/TH/IND)

• Swisspers (MY/TH)

(PH/TH/IND/SL/VT)

• Manicare (MY) (PH/SL/VT)

• Lady Jayne (MY) (PH/SL/VT)

• A'kin 1700 + doors

• Moosehead 700 +

doors

• A'kin

• Moosehead

• Manicare

Platform

FY18 Activated…

• WeChat / Weishang (agents)

• Tmall, Taobao, JD, VIP, Suning,

Kaola

• Flagship & POP Stores

• Classic Dist. Model

• 5X sales FY19

• Classic Distribution Model

• +55% in own brands in 2nd half

• MY 20X FY18

• 2 X National Grocery

• National Pharmacy

• Beauty retail

• Airlines / Home Shop

Classic Distribution

Model

M c P H E R S O N ’ S E X P O RT B ROA D E R T H A N C H I N A


China’s current

population is 1.4 Billion

Estimated that between

2009 and 2030, China will

have 850 million more

people in it’s middle class.

850M More Chinese Middle Class = Size of Prize $10 Trillion

Source: IRI Future of Pharmacy Presentation August 2018

C O N T I N U E D G ROW T H O F DA I G O U D E M A N D

47

MCP Approach

Trusted partnerships

Agreed business

model

Continuity of supply

Appropriate pricing

corridors

Outcomes

Speed to market

Flexibility to react to change

Rigorous processes

Adaptability in business

model

Virtuous

Cycle

DOMESTIC

EXPORT

M c P H E R S O N ’ S B U S I N E S S M O D E L S I N C H I N A


CHINA EXPORT

DEMAND

-9.7%

12.9%

32.8%

50.4%

Quarter To 22/10/17 Quarter To 21/01/18 Quarter To 22/04/18 Quarter To 22/07/18

Total Pharmacy

Dr. LeWinn's Line Smoothing Complex Growth % vs YA

Source: IRI Market Measurement – Pharmacy Scan, Data to: MAT Value To 22/07/18;

MAT= Moving Annual Total; Qtr= Quarter; YA= Year Ago

C H I N A S A L E S F U E L T H E D O M E ST I C / E X P O R T V I R T U O U S C YC L E


• Key Brands: A’kin & Karen Murrell

• Business Focus: CBEC Platforms (Tmall, Saint Cos, JD.com), Gift Shop & Daigou Network

• Key Brands: A’kin

• Business Focus: CBEC Platforms (Tmall Flagship Store , Kaola) & B2B network

• Key Brands: Dr Lewinn’s

• Business Focus: Distributor management platform & B2B network

Chemist Warehouse Tmall Flagship

• Key Brands: Revitanail, Trilogy

• Business Focus: CBEC Tmall Flagship Store

• #1 International Flagship Store Tmall Global

• Key Brands: A’kin & Karen Murrell

• Business Focus: CBEC Platforms (Little Red Book), Gift Shop & Daigou Network

Fewer partners leading to bigger results!

M c P H E R S O N ’ S C H I N A B U S I N E S S M O D E L S


CURRENT TRADING AND OUTLOOK


Soft Retail Environment• Pharmacy

• Grocery

Cycling Fragrances Losses• H1 -$12m + H2 -$2m = FY -$14m

FX & Commodity Pressures on Margins• AUD / USD Depreciation

• Relatively higher Resin and Metal costs

Growth in Domestic Owned Brands• Accelerating Share Growth

• Strategic Partnerships & Joint Business Planning across Key

Account Pharmacy and Grocery

• Underpinned by R&D Innovation to continue momentum

China Export & Geographic Expansion• New Zealand & Singapore, Business Units to (+) growth

• Malaysia, North Asia as well as UK

M & A / Ventures and Partnerships• Project Landscape = Defining rich space identification

• New Joint Venture Model live = Kotia launch

Capability: Great People, investment in tomorrow’s business &

skills sets today with excess capacity for growth!

A Healthy Balance Sheet

HEADWINDS PROGRESSIING THE PLAN


M C P H E R S O N ’ S S T R A T E G Y I S

to grow in health,

wellness and beauty

FORMAL RESOLUTIONS

R E - E L E C T I O N O F A D I R E C T O R - J A N E M c K E L L A R

2018 Annual General Meeting 53532018 Annual General Meeting

E L E C T I O N O F A D I R E C T O R - G R A N T P E C K


E L E C T I O N O F A D I R E C T O R - G E O F F R E Y P E A R C E


E L E C T I O N O F A D I R E C T O R – A L I S O N M E W



THANK YOU

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21 November 2018 11am - McPherson's Consumer …...2018/11/21 · 2016 CAGR To 2021 Global Face...

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